Patent Examination Delays are Rising at IP Australia

In my previous article I presented some data on Australian standard patent application prosecution events between 2017 and 2021.  While the total number of events (examination requests, examination reports, responses and acceptances) has remained fairly consistent in recent years, the data shows that the number of examination requests filed each year has increased since 2019, but that the number of first examination reports issued remained steady in 2019 and 2020, and fell in 2021.  All else being equal, this would suggest that the number of cases awaiting examination would have grown over this period, and therefore that the response time – i.e. the delay between an examination request being filed and a first examination report being issued – would be increasing.  So I decided to check this by analysing the delays for all initial examination reports issued since 2010.

Sure enough, what I have found is that the median delay has grown from just under seven months in 2019, to just over 11 months for examination reports issued so far in 2022 (although, being early in the year, this most recent data point is preliminary and may not be reliable).  At the same time, however, the 85^th percentile has remained fairly stable, rising from just under 11.5 months in 2019 to slightly over 12 months so far in 2022.  The 85^th percentile is significant, because IP Australia has a service level commitment to issue first reports on applications for standard patents within 12 months of receiving the request for examination, and to meet this commitment 85% of the time.  (At least, it used to have this target, although I have been unable to find a Customer Service Charter Report any more recent than the April-June 2020 quarter that still reports against this particular target.)  It appears, therefore, that despite an overall increase in examination response time for a ‘typical’ case, IP Australia is (just about) maintaining its targeted performance overall.

Even so, with what presently appears to be a growing backlog of applications awaiting examination, and a bumper year of new filings in 2021, it could become increasingly challenging for IP Australia to keep response times under control without increasing its patent examination capacity.  Furthermore, IP Australia’s own reporting indicates that some fields of technology – particularly chemistry, pharmaceuticals, and biotechnology – are experiencing greater delays than others, and falling well short of its targets.  IP Australia is not currently hiring new examiners, and the Australian budget papers released this week show no projected increase in average staffing numbers in the 2022-23 fiscal year.  But it will at least need to replace any staff who might leave.  And the March 2022 edition of its What’s New at IP Australia email bulletin (to which you can subscribe here) invited interested readers to register their interest in examination positions, to be notified when new vacancies are advertised.  Now might be a good time to register, particularly for prospective candidates with a background in chemistry, pharmaceuticals, or biotechnology.

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Tags: Australia, Examination, Patent Office

Who Were The Leading Australian Patent Prosecution Firms in 2021?

With significant increases in both standard and (especially) innovation patent applications, 2021 should have been a bumper year for patent attorneys operating in Australia.  And although that was true overall, the benefits were not uniformly distributed.  While some smaller firms experienced gains in filing numbers well above the overall growth rate, a number of larger firms within the publicly-listed ownership groups struggled to keep pace.  Spruson & Ferguson remained the biggest filer of new applications – particularly following integration of the Shelston IP business – but achieved virtually no overall growth in new filings.  The number of applications filed by third-placed Griffith Hack actually fell in 2021, with the firm narrowly avoiding falling behind fourth-placed FB Rice.

Having a focus on incoming work from foreign applicants, Spruson & Ferguson filed only marginally more new standard patent applications on behalf of Australian residents than its closest competitors, Davies Collison Cave and Griffith Hack.  About half of all filings handled by Spruson & Ferguson originated in the US, slightly above the overall proportion of 45% Australian standard applications by US applicants.  A handful of firms – particularly RnB IP, Pizzeys, and FPA Patent Attorneys – rely far more heavily on US-originating work, while Madderns is notable for handling a higher proportion of filings from China than from the US.

Looking beyond filings to ongoing patent prosecution work, Spruson & Ferguson was the leader in 2021, by a large margin.  Generally speaking, firms with larger numbers of filings over the previous few years had more prosecution work in 2021, which was an advantage for Spruson & Ferguson and Griffith Hack despite their failure to keep pace with their competitors in terms of growth in new filings.  The flip side of this, of course, is that relatively lower filing numbers in 2021 will result in less prosecution work over the coming years.

Read on for all the details.

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Tags: Annual patent data, Australia, Patent analytics, Patent attorney profession

Federal Appeals Court Affirms the Role of ‘Balance’ in Scheme for Extending Term of Pharmaceutical Patents

On 18 March 2022, the Full Court of the Federal Court of Australia issued decisions relating to term extensions of patents covering pharmaceutical products: Commissioner of Patents v Ono Pharmaceutical Co. Ltd [2022] FCAFC 39 (‘Ono’); and Merck Sharp & Dohme Corp. v Sandoz Pty Ltd [2022] FCAFC 40 (‘MSD’).  The two decisions have (at least) three things in common.  First, both were decided unanimously by a panel comprising Chief Justice Alsop and Justices Yates and Burley.  Second, both found against the patentee, with the court reversing the primary judge’s decision in Ono granting an extension of term, and confirming the primary judge’s decision in MSD nullifying a previously granted extension of term.  And, third, both referred to the principle set out in the objects clause (section 2A) of the Patents Act 1990 that ‘the patent system balances over time the interests of producers, owners and users of technology and the public’ (emphasis added).

The scheme for extending the term of pharmaceutical patents inherently involves a balancing act.  Its primary purpose is to ensure that patentees are not excessively disadvantaged by delays in securing regulatory approval to market patented products.  For example, if a drug is not approved for use until 10 years or more after a patent application is filed, the patentee may have less than half of the standard 20 year patent term remaining to compensate for its investment in discovery and development before becoming exposed to generic competition.  On the other hand, an extended period without competition necessarily exposes the wider public to higher costs of medical treatment.  In an effort to balance these competing interests, the relatively complex provisions of the Patents Act aim to ensure that a ‘typical’ pharmaceutical patentee benefits from up to 15 years of exclusivity, by granting extensions of the patent term of up to five years, i.e. to a maximum of 25 years from filing.  (A 2013 review of pharmaceuticals patents – which the government initially declined to release – found that 53% of such patents have an effective life of 15 years, while 89% have an effective life of over 10 years.)

The primary provisions of the Patents Act governing extensions of patent term are:

1. section 70, which sets out the conditions that must be satisfied before a patentee can apply for an extension of the term of its patent;
2. section 71, which sets time limits for filing of applications for extensions of term; and
3. section 77, which specifies how the duration of an extension of term is to be calculated. 

In each of Ono and MSD, the patentee sought to obtain an advantage, or avoid disadvantage, by arguing for beneficial interpretations of the extension of term provisions.  In each case they failed.  And in both cases the Full Court upheld the principle that the purpose of the extension of term scheme is to balance the competing interests of the patentee of a pharmaceutical substance against the public interest in the unrestricted use of the pharmaceutical invention after expiry of the patent.  In Ono, in particular, the Full Court rejected the proposition that sections 70, 71, and 77 should be construed to achieve a commercial outcome for the patentee.  In MSD the Full Court again invoked the principle of ‘balance’ in declining to permit an extension of term based on a later Australian marketing approval, in circumstances where the patentee had already obtained the benefit of an ‘export only’ approval of a substance falling within its patent claims with an effective life of over 15 years.

The relevance of the Full Court’s focus on balancing of interests, and its references to the objects clause, could extend beyond these cases.  The three judges here are all among the five who recently heard the appeal in the Thaler ‘AI inventor’ case, in which the competing interests of developers and owners of ‘invention machines’, and of the broader public (who might not see the same benefit in granting patent monopolies on automatically-generated inventions), are potentially at stake.  It will be interesting to see whether they adopt a similar approach to weighing up the balance of interests in that case, also.

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Tags: Appeal, Extension of patent term, Objects clause

Australian Appeals Court Seems Sceptical of Push to Name DABUS ‘AI’ as Inventor

On 9 February 2022, the appeal by the Commissioner of Patents against the decision of Justice Beach finding that the ‘AI’ machine known as DABUS (‘Device for the Autonomous Bootstrapping of Unified Sentience’) could be named as inventor on a patent application filed by Dr Stephen Thaler, was heard before an expanded Full Bench of the Federal Court of Australia.  The five-judge panel comprised Chief Justice Allsop, and Justices Nicholas, Yates, Moshinsky and Burley.  The appointment of an expanded panel (three judges is usual), including the Chief Justice, is notable, and suggests that the court considers the question of whether a machine can be an inventor for the purposes of the Patents Act 1990 to be one of particular legal importance.  The case was argued for Dr Thaler by David Shavin QC (who also appeared at first instance), and for the Commissioner of Patents by Sophie Goddard SC (appearing for the first time in this matter).  Hamish Bevan (who represented the Commissioner at first instance) argued the Commissioner’s case in reply.  The proceedings were conducted via video conference, and I observed online.

I think that it is fair to say that Dr Thaler did not experience such a smooth ride on appeal as he did at first instance.  Where Justice Beach seemed positively enthusiastic about the idea of allowing patent applications to be filed, and patents granted, for inventions autonomously devised by machines, the judges on the Full Bench appeared sceptical of a number of the arguments presented on behalf of Dr Thaler, and at times subjected Mr Shavin to fairly sharp questioning and criticism.  There are some aspects of the original decision that are unlikely to survive the appeal, although Dr Thaler only requires one line of reasoning to stand in order to prevail.

Based on the arguments presented, there are a number of sub-questions that the Full Court may need to decide.  First, there is a question of whether the case is simply about determining the meaning of the word ‘inventor’ as a matter of pure statutory construction, or about deciding whether or not to develop the concept of the inventor according to a common law methodology.  Either way, the court then needs to decide whether or not a non-human, machine inventor should be included.  In doing so, it may need to consider whether non-human inventors are compatible with other provisions of the Act, and in particular with the section that deals with the entitlement to be granted a patent.  A machine cannot possess or assign intellectual property rights, so provisions that most naturally apply to transfers of title between (natural or legal) persons may not necessarily be compatible with ‘AI’ inventors.  Justice Beach found that two different mechanisms specified in the legislation could apply to enable Dr Thaler to claim ownership of patent rights on inventions made by DABUS.  He will need at least one of these to survive the appeal.

There are a number of avenues by which the Commissioner could succeed in her appeal, but by the same token there are multiple opportunities for Dr Thaler’s defence of the appeal to be successful.  It is difficult to predict which lines of reasoning the court may adopt, and indeed it is not unlikely that the judges will hand down multiple concurring and/or dissenting opinions.  On balance, my sense is that the appeal is more likely than not to succeed – perhaps by a majority rather than unanimous judgment.  If so, then Australia will rejoin the many other jurisdictions in which corresponding applications naming DABUS as inventor have been rejected.

The remainder of this article provides a summary of the major arguments presented at the hearing.  It is somewhat lengthy, but considerably less so than the full day spent at the Federal Court!

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Tags: Appeal, Artificial intelligence, Australia, DABUS, Inventorship, Patent law